The National Credit Union Administration (NCUA) has opened the Community Development Financial Institution (CDFI) certification application process for credit unions.
CDFI certification is ideal for federally insured, low-income credit unions wishing to expand and enhance their capacity to provide financial services to underserved communities. Often these are rural communities, but they can also include communities in inner cities or anywhere people fall outside the financial system, and would benefit from greater access.
Why is CDFI certification so useful to credit unions?
Attaining a CDFI grant, through NCUA’s fully funded courses and training programs, allows credit unions to provide services to a wider membership base and offer these new members, who might have never before had access to banking, services that will enhance their lives.
“Expanding access and opportunity is fundamental to the credit union system’s mission, and it is one of the pillars of ACCESS, the agency’s financial inclusion initiative,” said NCUA Chairman Rodney E. Hood in a press statement. “I encourage eligible credit unions to explore using this tool as a way to serve underserved communities and provide them with needed credit and essential financial services.”
Under the Consolidated Appropriations Act, 2021, credit unions with less than $2 billion in assets are eligible for COVID-19 relief funding, which includes the training and certification that NCUA delivers through the ACCESS program. After completing this process, eligible credit unions can then offer federally insured financial products and services to underserved communities.
How to apply for the streamlined CDFI certification
Applications for this CDFI certification round opened to eligible credit unions on January 24 of this year and will close on April 3, 2021.
According to the NCUA’s instructions, “to qualify for the streamlined process, low-income-designated credit unions submit loan originations to the NCUA by email to CURECDFI@ncua.gov and complete an online participation form.”
To assess eligibility, The Office of Credit Union Resources and Expansion “analyzes each credit union’s products, services, and other indicators to determine whether it qualifies to use the streamlined certification application.” The office will then request additional information from each credit union to complete the application process, or let them know if they're not eligible for the streamlined approach and should instead use the standard CDFI application process.
Once an application has been submitted, the CDFI makes the final decision on certification. If a credit union is approved, it will then be granted access to the training they need to provide financial services to underserved communities. This is a fantastic way to increase membership while also delivering much-needed services to communities often bypassed by other financial institutions.
Now more than ever, underserved communities need an entry point to the mainstream financial system. Until the unbanked can open accounts, they won’t be able to use wealth-building products and services, such as savings and checking services, credit cards, loans, or mortgages.
Whole swathes of the economy are denied to the unbanked population, making it difficult to advance economically or socially. In underserved communities, gaining access to financial services also almost always benefits women in particular, giving them more control of money and therefore making it easier to manage family finances, or even to escape dangerous and unhealthy situations. There is no question providing financial products and services can make a huge difference in these communities.